Facebook to buy facial-recognition startup: sources

SAN FRANCISCO (Reuters) - Facebook Inc is paying $55 million to $60 million to buy Face.com, according to people familiar with the matter, acquiring the company that provides the facial-recognition technology used by the world’s largest social network to help users identify and tag photos.

The deal bolsters one of Facebook’s most popular features -- the sharing and handling of photos -- but the use of the startup’s technology has spurred concerns about user privacy.

The No. 1 social network will pay cash and stock for Face.com, potentially paying as much as $60 million, two sources with knowledge of the deal said. Media reports in past weeks have pegged the transaction at $80 million to $100 million.

Neither Facebook nor Face.com disclosed terms of the deal, which is expected to close in coming weeks.

Facebook, which will acquire the technology and the employees of the 11-person Israeli company, said in a statement that the deal allows the company to bring a “long-time technology vendor in house.”

Face.com, which has raised nearly $5 million from investors including Russian Web search site Yandex, launched its first product in 2009. The company makes standalone applications that consumers can use to help them identify photos of themselves and of their friends on Facebook, as well as providing the technology that Facebook has integrated into its service.

Facebook uses the technology to scan a user’s newly uploaded photos, compares faces in the snapshots with previous pictures, then tries to match faces and suggest name tags. When a match is found, Facebook alerts the person uploading the photos and invites them to “tag,” or identify, the person in the photo.

Responding to inquiries from U.S. and European privacy advocates, Facebook last year made it easier for users to opt out of its controversial facial-recognition technology for photographs posted on the website, an effort to address concerns that it had violated consumers’ privacy.

The deal is the latest in a string of acquisitions by Facebook in recent months, including the $1 billion acquisition of mobile photo-sharing service Instagram. U.S. antitrust regulators are undertaking an extended review of the Instagram deal, which Facebook expects to close by the end of the year.

Shares of Facebook, which continue to trade below the price at which they were offered during the initial public offering in May, closed Monday’s regular session up 4.7 percent at $31.41.